Sukkah Miami Beach Acquisitions, which owns the hotel, doesn't allege COVID-19 was ever present at its location, Miami-Dade County Circuit Judge William Thomas ruled Friday, finding the mere presence of the virus also doesn't cause "direct physical loss of or damage" to property.
The owner still possessed the hotel, which was open to a limited number of guests, the judge added. Despite emergency measure orders, the judge said "'essential lodgers' were permitted to stay at the hotel, further illustrating the point that the hotel was not 'uninhabitable' or 'substantially unusable.'"
Judge Thomas ruled that Zurich American Insurance and the hotel's other commercial property insurers don't have to cover losses to the hotel. There isn't any evidence suggesting any "physical loss or damage" and no jury could find any physical changes to the hotel, the judge said.
The hotel had to vacate nonessential lodgers, cancel reservations and decline new reservations for nonessential guests under emergency orders to curb the spread of the coronavirus, according to court records.
The insurers successfully asked for summary judgment, arguing that courts applying Florida law have repeatedly held that the presence of the coronavirus doesn't cause physical loss or damage. And Florida courts have ruled that the virus isn't capable of causing tangible injury to property, according to the insurers.
"Nobody could reasonably conclude that there was a direct physical loss or damage to plaintiff's hotel simply because it could not rent out every room to nonessential lodgers," the insurers said.
The hotel's owner argued but failed to convince Judge Thomas that the policies didn't require structural alteration or total loss of use to trigger coverage. The court shouldn't allow the insurers' failure to investigate to be used "as a shield and sword to alter the burdens of proof and persuasion," the hotel said.
The owner had argued that no Florida appellate court has agreed with the insurers' argument that "structural alteration" is the only meaning of "direct physical loss of or damage to property." Prior to the pandemic, a majority of cases addressing the issue ruled in favor of the policyholder, according to the hotel.
The results haven't been favorable to policyholders in the 51 decisions in Florida federal and state suits, according to data from the University of Pennsylvania's COVID Coverage Litigation Tracker, with the majority of the rulings coming in federal court. Eight of nine state court decisions tossed suits.
Counsel for Westchester Surplus Lines Insurance Co., one of the insurers, declined to comment Tuesday.
Counsel for the remaining parties didn't immediately respond to requests for comment.
Sukkah is represented by R. Hugh Lumpkin, Noah S. Goldberg and Nicole Langesfeld of Reed Smith LLP.
Westchester is represented by Steven J. Brodie and Heidi Hudson Raschke of Carlton Fields PA.
Zurich, HDI Global Specialty SE, Western World Insurance Co., General Security Indemnity Company of Arizona, Evanston Insurance Co., Navigators Specialty Insurance Co. and Certain Underwriters at Lloyd's of London are represented by Perry R. Goodman of Mound Cotton Wollan & Greengrass LLP.
Everest Indemnity Insurance Co. and Starr Surplus Lines Insurance Co. are represented by Jennifer A. Hoffman and Christine M. Renella of Zelle LLP.
The case is Sukkah Miami Beach Acquisitions LLC v. Zurich American Insurance Co. et al., case number 2020-017923-CA-01, in the Eleventh Judicial Circuit Court of the State of Florida in Miami-Dade County.
--Editing by Roy LeBlanc.
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